The term "enterprise software" usually refers to software products sold to very large companies, or at least "small and medium businesses" which have 200-500 employees. David's examples were geared more toward the "Fortune 5,000,000" -- the much larger market of small businesses with a handful of employees.
The economics of the "Fortune 5,000,000" are very different than true enterprise software, as it avoids employing a direct sales force. Obviously 37signals wouldn't turn away a team from General Motors who wanted to use Basecamp, but they don't actively market their products to large companies.
You're right about the difficulty of charging for online products in the consumer market. DHH said that they were having trouble getting customers for their personal organization product, Backpack, even at $5 a month. After they repositioned Backpack to be used by small businesses, they were able to increase the price and sales still grew tremendously.
You are right. I used the term "enterprise software" only as a contrast to "consumer software". The "Fortune 5,000,000" is probably the best target market for a startup.
Why? Targeting large enterprises (what the company I work for does) is also an extremely difficult market, but for other reasons than the consumer market. Selling to large enterprises requires professionel and experienced sales people with very good industrie contacts. You also might run into the "small company problem", i.e. you don't sell because you look too small and you don't have enough customer references. Not much fun!
We sell to large enterprises almost exclusively. It's "different" than selling to consumers, but not "harder". Longer sales cycle, higher average deal size.
The economics of the "Fortune 5,000,000" are very different than true enterprise software, as it avoids employing a direct sales force. Obviously 37signals wouldn't turn away a team from General Motors who wanted to use Basecamp, but they don't actively market their products to large companies.
You're right about the difficulty of charging for online products in the consumer market. DHH said that they were having trouble getting customers for their personal organization product, Backpack, even at $5 a month. After they repositioned Backpack to be used by small businesses, they were able to increase the price and sales still grew tremendously.